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Should You Pay for a Credit Monitoring Service? – Best Options

In 2017, the credit bureau Equifax announced that hackers had broken into its servers and gained access to the personal information of roughly 143 million people, putting them at risk of identity theft. In the wake of the attack, Equifax offered all U.S. victims a free year of credit monitoring through its new TrustedID Premier service. At the same time, searches on Google showed a surge of interest in other paid credit monitoring and identity protection services. These services comforted panicky consumers with the promise to catch signs of identity theft right away — or even stop it before it happens.

However, some financial experts argue that paid credit monitoring is a waste of money. At best, they say, these services do nothing for you that you can’t do on your own for less or even free. At worst, they can lull you into a false sense of security, leading you to neglect other measures that offer much more protection.

The truth of the matter lies somewhere in between. Paid credit monitoring and identity protection services do offer some valuable benefits, but they often come at a high cost. And the protection they provide isn’t always as strong as other measures you could take, which sometimes cost much less.

If you’re considering paying for a credit monitoring service, here’s what you need to know.

Benefits of Credit Monitoring Services

Paid credit monitoring services offer a range of benefits, which vary from provider to provider. These services say they can:

1. Catch Changes in Your Credit Report

The main purpose of credit monitoring services is to check your credit report on a daily basis. If any suspicious changes pop up, such as a new account being opened in your name, they send you an alert.

2. Keep an Eye on Your Identity

In addition to tracking your credit, some services also monitor black-market sites that deal in stolen Social Security numbers. If your number pops up on these sites, they alert you.

3. Help You Deal With Identity Theft

If a credit monitoring service finds signs that you’ve been a victim of identity theft, it can help you figure out how to deal with the problem. This could involve reporting the crime, changing your passwords, closing your accounts, or putting a freeze on your credit report, as discussed below.

4. Insure You Against Identity Theft

Dealing with identity theft can be an expensive and time-consuming process. For instance, you could have to pay for lengthy phone calls, insured mail, and in some cases, help from a lawyer. Some credit monitoring services come with identity theft insurance to cover these costs.

5. Track Your Credit Score

A final perk of credit monitoring services is that they give you access to your credit score at any time. However, most people wouldn’t want to use a service for this reason alone, since there are lots of ways to check your credit score for free.

Services that provide a higher degree of protection, such as checking on your Social Security number and insuring you against identity theft, often call themselves “identity theft protection services” rather than credit monitoring services. However, there’s no clear line between the two types of service. Experts such as Robert Harrow of Forbes use the term “credit monitoring” as a catchall for services across the spectrum, from those that only monitor your credit to those that also safeguard your identity.

Drawbacks of Credit Monitoring Services

The perks of credit monitoring services and identity theft protection come with a cost — and according to some experts, it’s too high. Downsides of credit monitoring include:

1. It’s Expensive

Costs for paid credit monitoring services vary. However, most services charge somewhere between $10 and $30 a month, or $120 to $360 per year.

2. It’s Unnecessary

The editors of Consumer Reports argue that the risk of identity theft isn’t as high as most people think. Although the Bureau of Justice Statistics says 17.6 million Americans — 7% of all U.S. adults — were victims of identity theft in 2014, roughly half of those cases only involved the fraudulent use of a credit card, which is a fairly easy problem to fix. According to Consumer Reports, the most damaging form of identity theft — having someone use your personal information to open new accounts — affected less than 1% of households in 2010.

3. It’s Inconvenient

Consumer Reports also argues that the alerts provided by credit monitoring services aren’t that useful. Most of them are about legitimate, routine changes in your credit file, such as running up or paying down the balance on one of your existing credit cards. Dealing with these alerts can be a hassle, and they do nothing to protect you from real fraud.

4. It’s Ineffective

The most serious problem with credit monitoring and identity protection services is that, in many cases, they can’t prevent identity theft; they can only react to it. Moreover, Consumer Reports argues that they don’t always do that quickly; in some cases, these services take days, weeks, or even months to warn you after detecting signs of fraud.

And even if these services spot your Social Security number for sale, Consumer Reports explains, “you can’t get it back”; all you can do is take measures to stop anyone from using it. However, people using credit monitoring services don’t always realize this. They assume the service is protecting them, so they aren’t as careful as they should be about guarding their personal information online.

Top Credit Monitoring & Identity Theft Protection Services

Each of the three big credit bureaus — Equifax, Experian, and TransUnion — offers a paid credit monitoring service, and some of them also have separate services for identity theft protection. There are numerous independent services as well. These services vary considerably in cost, features, and quality of service.

A yearly report by Javelin Strategy & Research offers a detailed comparison of identity theft protection services. It compares 18 different providers across three categories measuring how well they prevent identity theft, detect it when it occurs, and help users resolve problems and restore their identities afterward. Here’s a look at how some well-known services stack up.

1. Equifax Lock & Alert

Equifax is no longer accepting new customers for its TrustedID Premier service, which it created specifically in response to the 2017 hack. However, it does have a new free service called Lock & Alert, which lets you “lock” your Equifax credit report so no one can access it.

This service is similar to a credit freeze, discussed below, but it’s much easier to lift if you want to apply for a new credit account. All you have to do is swipe your screen or click a button in the mobile app or on the website; there’s no delay and no cost. However, this also means that anyone who steals your cell phone can gain access to your credit report.

2. Experian IdentityWorks

Experian has two separate services for credit and identity theft protection. Its credit monitoring service, called CreditWorks Premium, costs $25 a month. It monitors your credit report across all three bureaus, provides monthly updates, and lets you lock and unlock your Experian credit report with a single click. It also provides $1 million in identity theft insurance and assistance in dealing with identity theft or fraud.

Experian’s identity theft protection service, called IdentityWorks (formerly known as ProtectMyID), does a bit more. Its basic tier, IdentityWorks Plus, monitors the dark web for signs of your personal information and alerts you of changes in your legal address. It also provides most of the same services as CreditWorks Premium, but it only includes $500,000 in identity theft insurance. Prices for this service range from $10 a month or $100 a year for one adult to $20 a month or $200 a year for two adults and up to 10 children.

For an extra $10 a month or $100 a year, you can upgrade to IdentityWorks Premium, which adds several extra layers of protection. It notifies you if anyone uses your name to open a new account, apply for a payday loan, or commit a crime. It also alerts you to any use of your Social Security number and notifies you if a registered sex offender moves into your neighborhood. Both Plus and Premium levels come with a 30-day free trial.

Javelin gives Experian’s plan a higher rating than Equifax’s. It’s above average for preventing and detecting identity theft, but a bit below average for resolving it. However, Javelin doesn’t specify whether this rating is for the Plus or Premium tier.

3. TransUnion TrueIdentity

Like Experian, TransUnion offers both a credit monitoring service and a separate identity protection service. The credit monitoring service, which costs $20 per month, monitors your TransUnion credit report and score, allows you to lock and unlock your TransUnion and Equifax credit reports, and provides $1 million in identity theft insurance.

The identity protection service, called TrueIdentity, actually provides a bit less protection. You can only lock and unlock your TransUnion credit report, and it provides only $25,000 in identity theft insurance. However, you can’t beat the price — it’s completely free.

For a free service, TrueIdentity does surprisingly well in the Javelin report. It’s among the top three services for preventing identity theft, which Javelin calls “arguably the most crucial of the three categories.” It’s also above average at detecting identity theft. However, it’s the worst of all the services for resolving identity theft if it occurs.

4. LifeLock

Perhaps the best-known of all identity protection services is LifeLock. In addition to monitoring your credit file, this service looks for online payday loans, other online loans, and unauthorized address changes in your name. It also checks the dark web for your Social Security number and other personal information. LifeLock comes with security software from Norton for up to five devices, protecting your computer from malware and email scams, such as phishing.

LifeLock’s basic service costs $10 a month for the first year, then goes up to $13 a month. This service alerts you to changes in your credit report and illicit uses of your Social Security number. It also provides up to $25,000 in coverage for identity theft.

For $20 a month, which goes up to $25 after a year, you can upgrade to LifeLock Advantage. It alerts you to suspicious bank and credit card activity, as well as crimes committed in your name. It also increases the coverage for identity theft to $100,000.

The top-tier plan, LifeLock Ultimate Plus, provides $1 million in coverage, a yearly copy of your credit report and score from all three credit bureaus, and alerts you to suspicious investment activity in your name. It costs $30 a month for the first year and then goes up to $35 a month. Javelin names LifeLock Ultimate Plus one of the top three services for detecting identity theft and says it’s above average, though not by much, at preventing or resolving it.

5. IdentityForce

Javelin names IdentityForce “best in class” out of all 18 services in its report, giving it top marks in all three categories. This service monitors a wide variety of sources — including banks, auto dealers, government agencies, the National Change of Address (NCOA) database, payday lenders, social media, sex offender registries, and the dark web — for any use of your personal information. If it finds a problem, it sends you alerts via text and email.

IdentityForce also promises you control over your data. It gives you access to your medical records and offers tools to help you reduce junk mail, protect your computer from malware, and detect phishing email scams. It even has a special feature to help you quickly and easily replace credit, debit, and ATM cards if your wallet or purse is lost or stolen.

If someone still manages to steal your identity, IdentityForce has a team of experts available 24/7 to help you with paperwork and calls. It also offers $1 million in identity theft insurance.

IdentityForce has two tiers of service. Its basic UltraSecure plan costs $18 a month or $180 per year. For $24 per month or $240 per year, you also get monitoring of your credit reports from all three bureaus and full access to your credit report and score.

6. ID Watchdog

Another top-rated protection service in the Javelin report is ID Watchdog. It’s at the top of the list for both preventing and detecting identity theft, and it’s above average for resolving it. The basic service, ID Watchdog Plus, costs $15 a month and does the following:

Monitors your TransUnion credit report and alerts you to any changes

Checks official records, such as courts, elections, and the NCOA database, for signs of identity theft

Checks for money transfers, payday loans, and other personal loans in your name

Looks for your personal information on the black market

Provides a team of specialists to help you deal with identity theft and offers a 100% guarantee that they will remove fraudulent records and restore your identity

The ID Watchdog Platinum service, which costs $20 a month, monitors all three of your credit reports instead of just TransUnion’s. It also offers access to your credit report and score at any time.

7. Identity Guard

The main feature of Identity Guard is IBM’s Watson, an artificial intelligence (AI) program that scans billions of pieces of data for signs of identity theft or fraud. Identity Guard offers three tiers of service.

The Value plan costs $9 a month for one person or $15 a month for a family. It monitors the dark web for signs of your personal information, checks for new transactions in your name, and warns you about potential data breaches, phishing scams, and malware on your computer. It also includes an anti-phishing mobile app, malware protection for your browser, $1 million in identity theft insurance, and access to a case manager who can help you in the event of identity theft.

The Total plan provides the same protections as the Value service, plus monthly access to your TransUnion credit score and notification of changes in your credit profile, such as new accounts being opened in your name. It costs $20 per month for individuals and $30 per month for families.

Identity Guard’s top-tier service, the Premier plan, includes everything in its Total service, plus an annual credit report from all three credit bureaus. However, this feature probably isn’t worth the extra $5 a month, since you’re already entitled by law to a free annual credit report from all three bureaus.

The Premier service (previously named Identity Guard Platinum) receives an above-average rating from Javelin. It’s in the top half of ratings for prevention, detection, and resolution, but it’s not in the top three for any of them.

8. Credit Sesame

Like TransUnion’s True Identity, Credit Sesame offers credit monitoring at no charge. It monitors your credit report from TransUnion and alerts you to major changes, as well as providing you with monthly updates on your TransUnion credit score. It also comes with $50,000 in identity theft insurance.

Credit Sesame’s paid services provide more protection. Its Advanced Credit service, which costs $10 a month, monitors your credit report from all three bureaus and gives you monthly copies of your credit report and score. Its $16-a-month Pro Credit plan also provides 24/7 access to experts who can help you deal with errors on your credit report or with a lost or stolen wallet. For $20 a month, you can get its Platinum Protection service, which monitors the black market and public records for your personal information.

Javelin rates Credit Sesame as a bit below average in all three categories. It’s not clear whether this rating is for the free version of the service or one of the paid versions.

9. Credit Karma

Another service that offers free credit monitoring is Credit Karma. It monitors your credit reports and scores from both TransUnion and Equifax and sends you weekly updates. It also alerts you right away to major changes like a new account or an application for credit in your name. Plus, unlike Credit Sesame, it provides access to an abbreviated version of your credit report from these two bureaus on demand.

Credit Karma doesn’t include free identity theft insurance like Credit Sesame. However, it offers one feature Credit Sesame doesn’t have: the ability to notify you if your email address has ever been exposed in a data breach.

Alternatives to Credit Monitoring

Signing up for a credit monitoring service isn’t the only way to protect your identity online. There are ways to do some, but not all, of what these paid services do on your own. Some are free, while others come at a small cost. However, they all require a bit more effort on your part than just sitting back and letting a service alert you to any problems.

1. Check Your Credit Report

By law, each of the three credit bureaus is required to give you a copy of your credit report once a year at no cost. The easiest way to get these reports is to visit AnnualCreditReport.com. Make sure you use this exact site; many sites with similar names are fakes that either try to trick you into paying for credit monitoring or install malware on your computer.

Experts recommend staggering your reports from the three bureaus throughout the year, checking one every four months. That way, you can find and fix errors on your credit report more promptly.

Checking your credit report costs nothing, but it has limitations. You can only do it every four months, and you can only catch problems after they occur. Checking your credit report can’t do anything to prevent identity theft or to deal with the problem if it happens.

2. Use Free Banking Apps

Your credit report provides an overview of what’s going on with all your credit accounts. You can also keep track of those accounts individually using a website or mobile app. By logging in to each of your credit card and bank accounts regularly — monthly, weekly, or even daily — you can detect problems, such as fake charges or missing money, right away.

Of course, you can only use apps to check on accounts that you know about. They can’t help you spot a new, fake account that someone else has opened up in your name. However, by combining mobile apps with your free credit reports, you can catch both new accounts and problems with existing ones.

3. Explore Credit Card Protections

Along with their free apps for checking your account, some credit cards provide extra features to protect your identity. For instance, if you have a Discover credit card, the company monitors your Experian credit report and alerts you to any new accounts in your name. It also checks thousands of risky websites that are likely to reveal personal information and alerts you if your Social Security number shows up on any of them.

Certain cards from Citi come with protections for victims of identity theft. If you have one of these cards, the company will help you through the process of re-establishing your credit, even if the card involved in the fraud was from a different company. Citi’s team of specialists can help you report errors to the credit bureaus, other companies, and the police.

If you have one of these cards, the service it provides can do at least part of the job of a paid credit monitoring service. And even if you don’t, it’s worth checking the terms of your cards to see if any of them offer similar protections.

4. Set Up a Fraud Alert

The Javelin report notes that most identity protection services aren’t as good at preventing identity theft as they are at detecting and correcting it. If your goal is to stop identity theft before it happens, a more useful move is to put a fraud alert on your credit report. Doing this requires businesses to take extra precautions when setting up a new account in your name, such as calling the phone number on your record to verify that you’re the person asking for credit.

There are two kinds of fraud alerts. An initial fraud alert, which is available to anyone, is good for one year, and you have the option to renew it when that year is up. If you’ve already been the victim of identity theft, you’re allowed to create an extended fraud alert, which lasts for seven years.

Both types of fraud alert are free to set up. All you have to do is contact one of the three credit bureaus to request it, either by phone or online. That credit bureau is then required to notify the other two, so you’ll end up with alerts on all three of your credit reports.

5. Freeze Your Credit

A fraud alert makes it harder for thieves to use your name to set up new accounts, but not impossible. If you want to make 100% sure that no one uses your credit information this way, you need a credit freeze. A credit freeze completely prevents lenders from pulling your credit report, making it all but impossible for anyone else to open a new account in your name. Financial advisor Jason Lina, writing for Forbes, calls a credit freeze “the ultimate in protection.”

Setting up a credit freeze used to cost a fee, as did lifting that freeze. As of September 21, 2018, freezing and unfreezing your credit is free throughout the United States. However, freezing your credit still has a couple of downsides:

It Can Be Inconvenient. It only takes a few minutes to set up a credit freeze with one credit bureau, but you must go through the process with each of the three credit bureaus separately. Moreover, if you ever decide you want to open a new credit account, you’ll have to lift the credit freeze temporarily to do so. Each bureau will send you a password or PIN when you set up your credit freeze, which you must use to lift the freeze either temporarily or permanently. If you lose that PIN, you’ll have to go through even more hassle to get a new one.

It Doesn’t Protect You Completely. A credit freeze doesn’t protect you from all forms of identity theft. It keeps thieves from creating new accounts in your name, but it can’t stop them from getting into accounts you already have. So even if you’ve frozen your credit, you still need to monitor your bank and credit card accounts for signs of fraud.

6. Recovering from Identity Theft

Most credit monitoring services provide you with tools to help you recover from identity theft. However, a lot of those same tools are available for free on IdentityTheft.gov. The site asks you questions about the crime and then creates a personal recovery plan for you that walks you through the steps needed to report the crime and restore your identity. It pre-fills letters and forms for you to send to businesses and helps you keep track of your progress toward repairing the damage.

The one thing this site doesn’t offer is insurance to cover the financial costs of dealing with identity theft. There’s a chance you could already have this coverage as part of your homeowners insurance policy. Most policies don’t include this coverage, though, and those that have it usually provide very limited coverage — typically around $500, according to NASDAQ. That’s quite a bit less than the $25,000 to $1 million most credit monitoring services provide.

The Value of a Credit Monitoring Service

As you can see, you can’t quite do everything a credit monitoring service does on your own. You can check your credit report regularly for free, but not every day, and you can’t easily scour the dark web for signs of your Social Security number. You can protect your identity with a credit freeze, but it’s harder to use than the “lock and unlock” feature offered with some credit monitoring services. And chances are, you don’t have insurance — or at least, not enough — to protect you against financial loss in case of identity theft.

Overall, credit monitoring and identity protection services do seem to give you something for your money. The question is, are they worth the cost for you?

The answer to that question depends on three things:

1. How Big Is Your Risk?

Identity thieves have lots of ways of getting at your personal information, from phishing scams to stealing your wallet. If your personal information has been exposed — for instance, if you know you’ve been the victim of a credit breach like the Equifax hack — that increases your chances of having your identity stolen.

If you’ve put a fraud alert on your credit file, that makes your risk lower. And if you’ve already frozen your credit, your risk is next to nothing.

2. How Much Could Identity Theft Hurt You?

According to the Bureau of Justice Statistics, most victims of identity theft in 2014 did not lose money as a result of the crime. Only 14% of victims reported any loss greater than $1, and about half of those victims lost $100 or less.

However, a small number of victims lose much higher amounts. For people who lost money as a result of “personal information fraud” — that is, identity thieves opening new accounts in their name — the median loss was $2,000. If you couldn’t easily afford to lose that amount of money, then buying yourself a little protection could be a smart move.

3. Can You Afford the Service?

Of course, you have to balance the potential cost of identity theft against the cost of a service to protect yourself against it. If you’re on a tight budget, spending $120 to $360 per year for a credit monitoring service isn’t a trivial expense.

However, not all credit monitoring services cost this much. Free services, such as Credit Karma or the basic service from Credit Sesame, don’t always give the best protection, but they offer a good alternative if you can’t easily afford a full-featured identity protection service.

Final Word

There’s no real downside to using a free credit monitoring service, such as Credit Karma or TrueIdentity. These services don’t offer the highest possible level of protection, but they don’t cost anything, so you have nothing to lose by using them.

You can even sign up for several free services, giving yourself multiple layers of protection. For example, if you get both TransUnion TrueIdentity and Equifax’s Lock & Alert service, you’ll be able to lock and unlock your credit reports from two of the three credit bureaus at will. If you want 100% protection, you can protect your Experian credit report as well with a credit freeze.

If you want the absolute best protection against identity theft and are willing to pay whatever it takes to get it, then your best bet is to spring for a top-rated service like IdentityForce, which provides the most all-around protection at all levels — preventing, detecting, and dealing with identity theft. The $180 per year this service costs will be money well spent if it buys you peace of mind.

Do you think credit monitoring services are worth the money? Why or why not?

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Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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